Doug Rathbone is trying to position
Nufarm
so it does not miss out on the enormous opportunity crop protection companies have that comes with booming demand for global grain crops because of changing living standards and farming practices.

Rathbone, who has given himself another three years to complete his turnaround plan for Nufarm, has made some progress with the company returning to profitability in the year ended July 31 after two years of heavy losses.

The company’s $72 million net profit was largely in line with expectations but the focus has been on Friday’s decision to try to and raise US$300 million in debt from U.S. investors, which prompted the company to push forward its results announcement.

Rathbone and the board have taken a conservative approach to dividends as the company focuses on cutting debt, which stood at $468 million at the end of fiscal 2012. Nufarm’s debt looks likely to be about $400 million - $450 million this year.

The challenge is seeking a sensible balance between strengthening the balance sheet and paying returns to shareholders, who this year received their first dividend payments since 2009. The company would not discuss the US move this morning, prompting some to wonder if it could have trouble securing the debt in Australia.

Related Quotes

Company Profile

Rathbone also needs to keep some powder dry to complete the company’s restructure and keep investing in growth initiatives and new products.

This is crucial for Nufarm at a time when new technologies are replacing traditional insecticides and fungicides. Companies such as Germany’s Bayer and Switzerland’s Syngenta are investing heavily in buying companies with biotechnology-based solutions to pest and disease problems. US-based Becker Underwood is working on things like microscopic worms that eat fungus gnats in soil.

Rathbone says Nufarm is not being left behind in the technology race and is investing in nanotechnology and other new developments as opposition towards old chemical-based solutions grows..

Nufarm’s crop protection accounts for 94 per cent of revenue. It is confident about the current year, predicting underlying earnings growth but not giving specific forecasts, as farmers now have a strong incentive to plant more crops to maximise yield thanks to soaring soft commodity prices.

However, it acknowledges it is hard to tell exactly how strong demand will be, except for Brazil, which looks promising as major crops are about to be planted. Nufarm makes most of its money in the second half of the year.

Margins were soft in its insecticides business which is going through a portfolio transition as Nufarm phases at our old products.

The result included a $42.8 million hit from major one-off items that was an improvement on last year’s $148.1 million. This included $30.4 million in costs for settling a shareholder class action claim over Nufarm’s alleged failed to disclose the true position of its glyphosate operations following a sharp downturn in global prices in 2009.

While most of the 45 per cent uplift in Nufarm’s share price this year has been largely because of rising commodity prices, the company is working hard to right past wrongs.

Nufarm has recruited former Coles Liquor finance director Paul Binfield as chief financial officer and former Elders managing director Greg Hunt in a marketing and business development role. It has also made other senior hires in the areas of global procurement, business information, risk management and internal audit.

Rathbone has been in the top job since 1999 and while he plans to stick around for awhile Nufarm would be wise to start working on succession planning.